After successfully managing a Wet Seal at a Pennsylvania mall, Nicole Cogdell was promoted to manage a new store at the higher-end King of Prussia mall. Then, company vice-president Barbara Bachman paid Cogdell's store a visit. Cogdell says, "She literally looked at my district manager and said, 'That's the store manager? I wanted someone with blonde hair and blue eyes.'"

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Cogdell was fired four days later and replaced by a white woman with less experience and a worse job performance record — who was nonetheless paid more.

A key piece of evidence in the suit is an email sent by Bachman just after her visit to the King of Prussia store. In a litany of complaints about regional stores visual merchandizing, adherence to corporate directives, and organization, Bachman voiced this criticism:

Store Teams - need diversity. African American dominate - huge issue.

Bachman no longer works for Wet Seal, but Cogdell and her co-plaintiffs maintain that her attitude was indicative of a pervasive and mostly unspoken bias against black employees at the company. They say workers who happened to be black were denied promotions offered to comparably experienced and qualified whites and paid less than their white peers. The plaintiffs are seeking class-action status for their lawsuit — a classification by the court that has become more difficult to obtain since the Supreme Court ruled last year in favor of Wal-Mart in a sex-discrimination lawsuit brought against the retailer. The retail sector is notorious for employment discrimination on the basis of sex and race, whether it be American Apparel's insanely strict grooming standards for workers ("good" hair for black employees, thick eyebrows for women) or the $40 million class-action racial discrimination lawsuit that Abercrombie & Fitch settled in 2004.

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Meanwhile, Wet Seal's ongoing poor business performance has drawn the attention of activist shareholders who would like to shake up the company's corporate leadership. The retailer reported a $12.4 million loss during the second quarter and says same-store sales for the month of August fell year-on-year by a whopping 18.3%. Activist investor group the Clinton Group Inc. is seeking to unseat four company directors. It's not known whether Clinton's agenda includes changing the chain's hiring practices: no mention of the ongoing lawsuit is made in Women's Wear Daily's story about Wet Seal's economic woes.